- Legislation unlikely to receive full Congressional approval until Spring 2020
- Policymakers divided over whether to adopt private or public cannabis model
- Senate plan would see first cultivation licences issued by mid-2021 with commercial retail not expected until at least 2022
Even if the Senate of Mexico passes a cannabis legalization bill in the coming days, experts warn the legal process of ending prohibition will likely extend well into 2020.
Timing issues aside, the form legal cannabis will ultimately take in Mexico remains a matter of fundamental debate among policymakers. The question of whether the country will follow Canada and build a commercial cannabis industry, or keep everything from seed-to-sale under strict government control – similar to how Mexico has long approached oil and gas via state-owned Pemex – is also likely to remain unanswered this year, experts say.
Mexico’s 128-member Senate is widely expected to approve legislation by mid-November that would instantly decriminalize cannabis possession in Mexico and begin the process of establishing a Canadian-style commercial cannabis market in the country by 2022. However, the 500-member Chamber of Deputies – the lower house of Mexico’s bicameral legislature – must also review, debate and approve the measure, which Jorge Rubio says cannot be done before Nov. 30, when the current legislative session ends.
“There is no way they will have enough time to analyze, make their own technical opinions to the deal and send it back to the Senate,” Mr. Rubio, a technical advisor to the Mexican Senate on cannabis, said in a telephone interview. Mr. Rubio, who previously worked in pharmaceutical regulation for the Mexican government after several years in Mexico’s pharma sector, said bills sent from the Senate to the lower house in November are often delayed until the next session – which begins in February – as Mr. Rubio said Deputies typically spend the month focused on the federal budget.
“The other possibility is that a presidential order asks Congress to pass the cannabis legislation this year,” Mr. Rubio said. “Then everyone is moving and saying ‘vote, vote, vote’ and it is fast-tracked and we will have a law by the end of November, but [cannabis] is not a priority of the President [Andrés Manuel López Obrador] right now, Mexico has many other important problems.”
Presidential priority or not, the Mexican government remains obligated to comply with several recent Supreme Court rulings broadly declaring cannabis prohibition unconstitutional, said Guillermo Cruz Rico, a Toronto-based lawyer authorized to practice in both Canada and Mexico. Citing the violence in Culiacan earlier this month surrounding the government’s capture and subsequent release of Ovidio Guzmán - son of infamous (and now incarcerated) drug kingpin Joaquín “El Chapo” Guzmán - he says the odds of cannabis legislation passing both chambers of Mexico’s Congress in 2019 are now roughly 40 per cent.
“Due to that incident [in Culiacan” and the shocking impact on public opinion in Mexico, I’m not sure the government will decide this is the ideal timing [for cannabis],” Mr. Cruz Rico said.
The Senate plan would establish a private cannabis industry in the country, modelled in part on the Canadian system, except regulated by a new federal agency called the Mexican Institute of Cannabis (MIC). Restrictions would ban vertical integration, forcing companies to focus specifically on cultivation, processing, retail or importing. Licences for importing would also cover exporting, Mr. Rubio explained, but crucially, the MIC would not be funded until 2021, leaving it unable to issue any licences for any category; cultivation included.
“The order of priorities is wrong,” Mr. Rubio said. “If we don’t have [licensed cannabis producers] in Mexico, how can the domestic recreational market be supplied? We would have to import.”
Passage of the current proposal would immediately decriminalize cannabis possession in Mexico, Mr. Cruz Rico said, but agreed with Mr. Rubio’s assessment that it would also mean “you won’t be able to produce [cannabis] commercially. You will have to wait until there is [regulatory] capacity to do that.”
Non-Mexican ownership of cannabis companies would also be limited to 20 per cent under the Senate plan, though Mr. Cruz Rico said Canadian cannabis players such as Khiron Life Sciences that are counting on Mexico being a major growth market should not be dissuaded.
“Having the proper corporate structure in Mexico, [Canadians] would be able to fulfill Mexican requirements in order to participate in this very interesting and promising industry,” he said.
Chris Naprawa, Khiron’s president, said the current Senate plan remains far from the final version of legalization Mexicans will eventually see.
“What we just saw last week does not really resemble what was first tabled last November, there have been dramatic changes between [October 2018 when the bill was first outlined] and now,” Mr. Naprawa said in an interview. “The one thing I know for sure, man, this is going to change again. I can’t tell you how it is going to change or where it is going to change, but it is definitely going to change. The complexities around what they are trying to do, setting up a whole new governing body, that will take time and there will be a lot of political back and forth on that.”
As the Senate prepares to pass its own version of cannabis legislation, Mr. Rubio says it is important to keep in mind the latest developments in the Chamber of Deputies. There, governing Morena Party leader Mario Delgado “presented a few weeks ago a bill that is totally different from the Senate version,” Mr. Rubio said. “That one is focused on the state control of cannabis from seed to sale, like Pemex does for oil and gas. Imagine a Pemex for cannabis. That is their position [and] when [the Senate] document goes to Deputies we will see what they are thinking.”
“I foresee a struggle between Senators and Deputies to define which cannabis model is correct for Mexico,” Mr. Rubio said. “And I definitely don’t think there will be enough time to effectively manage this topic in only three weeks.”